Adding Posts to Pages

The version I’m using of Atahualpa is actually 3.7.12. What I am trying to accomplish is I want to have a menu bar that has the home page with multiple posts and then the following items on the menu would actually be categories. It seems it’s not possible to create a menu that has pages and post categories on the same menu. If it is, please let me know.

What I have done, however, is I have created pages named after the categories. I would then like to add the posts related to that category on that page. Is that possible?

http://wordpress.org/extend/themes/atahualpa/